The Stock Market and Phillips 66

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Logo of Phillips 66. “We are standing on the shoulders of giants,” said Phillips 66 CEO Greg Garland. “People like E. W. Marland, who started Marland Oil in 1911, and Frank and L. E. Phillips that started Phillips Petroleum in 1917. I could go on and on and list the giants that have come before us that have so well positioned this company for the success that we enjoy today.”[1] Photo: ConocoPhillips
The 587 foot tall Mammoet PTC 140 crane, seen here from North First Street, towers over the refinery in Ponca City, Oklahoma built by E. W. Marland. The crane was used to move two new coker reactor units within the refinery in September, 2013. The photograph was taken from almost two miles away from the crane. Photo: Hugh Pickens All Rights Reserved.

The Stock Market and Investor Relations

Phillips 2013 Stock Performance. Phillips 66 (PSX) finished 2013 with its stock price at 77.34 up 24.24 points from its clsoing price of 53.10 on December 31, 2012 for an appreciation of 45.6% over its closing price for 2013.[2] Graphic: Hugh Pickens
Phillips 2012 Stock Performance. Phillips 66 (PSX) finished 2012 with its stock price at 53.10 up 19.36 points from its opening price of 33.74 on May 1, 2012 for an appreciation of 57.4% over its opening price for 2012.[3] Graphic: Hugh Pickens

Stock Performance

January 1, 2014: Phillips Stock Appreciates 45.6% in 2013

Phillips 66 (PSX) finished 2013 with its stock price at 77.34 up 24.24 points from its closing price of 53.10 on December 31, 2012 for an appreciation of 57.4% over its closing price for 2013.[4]

January 1, 2013: Phillips Stock Appreciates 53.10% in 2012

Phillips 66 (PSX) finished 2012 with its stock price at 53.10 up 19.36 points from its opening price of 33.74 on May 1, 2012 for an appreciation of 57.4% over its opening price for 2012.[5]

Dividends and Stock Repurchase

February 14, 2014: Garland Says Phillips Believes in Bulletproof Dividends

Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips believes in bulletproof dividends. "We think that growing shareholder distributions is key to growing total shareholder return. We believe in bullet proof dividends. We believe in not only secure but growing dividends and competitive dividends. We nearly doubled the dividends since the spin."[6]

February 7, 2014: Phillips Declares Quarterly Dividend of 39 cents

Marketwatch reported on February 7, 2014 that the board of directors of Phillips has declared a quarterly dividend of 39 cents per share on Phillips 66 common stock payable on March 3, 2014, to shareholders of record at the close of business on Feb. 18, 2014.[7]

December 6, 2013: Phillips Announces New $2 Billion Share Repurchase Program

Businesswire reported on December 6, 2013 that Phillips' board of directors has approved a new $2 billion share repurchase program, consistent with the company's strategy to grow shareholder distributions. “Returning capital to our shareholders is fundamental to creating value and delivering superior total shareholder returns,” said Phillips 66 Chairman and CEO Greg Garland. “Our disciplined capital allocation process complements these distributions with capital spending and reinvestment in our higher-valued businesses.” The shares will be repurchased from time to time in the open market at the company's discretion, subject to market conditions and other factors, and in accordance with applicable regulatory requirements.[8]

October 2, 2013: Phillips Increases Quarterly Dividend to 39 cents

Seeking Alpha reported on October 2, 2013 that the board of directors of Phillips declared a quarterly dividend of 39 cents per share on Phillips 66 common stock, representing an increase of approximately 25 percent from the prior quarter. The dividend is payable on Dec. 2, 2013, to shareholders of record at the close of business on Nov. 14, 2013. "Our objective is to consistently increase shareholder distributions, while also capturing attractive opportunities to reinvest in our businesses and grow future returns," said Phillips 66 Chairman and CEO Greg Garland. Returning capital to our shareholders remains a priority for Phillips 66, and we are pleased to deliver another increase in our quarterly dividend."[9]

July 10, 2013: Phillips Declares Quarterly Dividend of 31.25 cents

istockanalyst reported on July 10, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on September 3, 2013, to shareholders of record at the close of business on August 16, 2013.[10]

May 8, 2013: Phillips Declares Quarterly Dividend of 31.25 cents

The Wall Street Journal reported on May 8, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on June 3, 2013, to shareholders of record at the close of business on May 20, 2013.[11]

February 11, 2013: Phillips Declares Quarterly Dividend of 31.25 cents

Investors Business Daily reported on February 11, 2013 that Phillips declared a quarterly dividend of 31.25 cents per share payable on March 1, 2013, to shareholders of record at the close of business on Feb. 18, 2013.[12]

December 7, 2012: Phillips Increases Quarterly Dividend from 25 cents to 31.25 cents

Bloomberg reported on December 7, 2012 that Phillips has announced that the company is raising its quarterly dividend to 31.25 cents per share from 25 cents. The new dividend will be paid in the first quarter of 2013. Phillips 66 also said it approved the repurchase of another $1 billion in company stock. It approved the repurchase of $1 billion shares during the third quarter as well.[13]

October 3, 2012: Phillips Increases Quarterly Dividend from 20 cents to 25 cents

Businesswire reported on October 3, 2012 that Phillips has declared a quarterly dividend of 25 cents per share on Phillips 66 common stock, representing a 25 percent increase from the prior quarter. “This 25 percent increase reinforces our objective to provide competitive and growing dividends,” said Phillips 66 Chairman and CEO Greg Garland. “Allocating capital to dividends and repurchases while continuing to invest in the growth of our business is fundamental to our philosophy of delivering shareholder value.”[14]

July 12, 2012: Phillips 66 Initiates $0.20 Quarterly Dividend

Michael Aneiro reported on Barrons on July 11, 2012 that Phillips 66 announced a quarterly common stock dividend of 20 cents per share, payable Sept. 4 to stockholders as of July 23. “Phillips 66 has a clear strategy to improve returns and to deliver a strong, competitive dividend program to our investors,” said compay chairman and CEO Greg C. Garland. “We are convinced that returns, growth and distributions create value.”[15]

Stockholder's Meetings

May 8, 2013: Phillips Holds First Stockholder's Meeting in Houston

Greg Garland told Phillips stockholders at the first meeting that Phillips had executed the spin-off from ConocoPhillips flawlessly. "When you think about the Company, we had a strong operating performance. We ran well," said Garland. "We stood up the Company in a very favorable margin environment, so all those things came together for really strong year of financial performance for our Company. We delivered $5.4 billion of [adjusted] net income in 2012. Our return on capital employed was 22%. We're so proud of our employees and what they accomplished in standing up the Company, but also for their commitment and their dedication in creating and capturing value for our shareholders."[16]

Garland received questions from stockholders John Pajak who works at the Bayway Refinery and commended Phillips for its repsonse to Hurricane Sandy. Stockholder Jimmie Dunn commended Phillips on its first year performance and asked why Phillips bought back stock rather than increasing the dividends. Stockholder Governor Clements said he was very pleased with Phillips' performance. Stockholder Jim White said he was a suppler to Phillips and commended Phillips for the response post superstorm Sandy and for Phillips ongoing commitment to family values and safety. Stockholder Michael Mulvany, the business manager for a local steamfitters union headquartered out of North New Jersey, thanked Phillips for their commitment to safety. "My union's relationship with that refinery goes back 103 years when Mr. John D. Rockefeller opened up Standard Oil," said Mulvany. "We've been there when it was Exxon, Tosco, ConocoPhillips and now Phillips 66. And we're hoping to be there another 103 years with all you fellows, and your good team of leadership." Stockholder Caroline Hockley asked about Phillips controlled pipelines and Garland responded that Phillips has "a state-of-the-art controlled facility, one of the newest and, I think, best in the industry in Bartlesville, Oklahoma." Stockholder Jimmie Dunn asked how he could get a tide in ConocoPhillips "beautiful hot air balloon."[17]

April 17, 2013: Phillips Announces First Annual Stockholder's Meeting

The Herald Online reported on April 17, 2013 that will host its First Annual Meeting of Stockholders on Wednesday, May 8, 2013 at 9:00 a.m. CDT at the Marriott Houston Westchase at 2900 Briarpark Drive, Houston 77042. Stockholders must present an admission ticket or proof of ownership of Phillips 66 stock, as well as valid picture identification, to enter the meeting. Phillips also encourages company employees to attend the meeting.[18]

Earnings Conferences

2013 Year: January 29, 2014: Phillips 2013 Earnings Beat Expectations But Fall Short Of The Prior Year

The Houston Business Journal reported on January 29, 2014 that Phillips reported full-year 2013 earnings of $3.7 billion, or $6.02 per share, and adjusted earnings of $3.6 billion, or $5.89 per share. Analysts had expected full-year earnings of $5.64 per share. In 2012, Phillips 66 had earnings of $4.1 billion, or $6.48 per share, and adjusted earnings of $5.3 billion, or $8.38 per share.[19]

The Refining Business Segment TBD

The Chemical Business Segment TBD

The Midstream Business Segment TBD

2013 Q4: January 29, 2014: Phillips Q4 Earnings Beat Expectations But Fall Short Of The Prior Year

The Houston Business Journal reported on January 29, 2014 that Phillips fourth-quarter earnings beat analysts’ expectations with earnings of $826 million, or $1.37 per share, and adjusted earnings of $808 million, or $1.34 per share. Analysts polled by Thomson Reuters had estimated earnings of $1.10 per share. In the fourth quarter of 2012, Phillips 66 had earnings of $708 million, or $1.11 per share, and adjusted earnings of $1.3 billion, or $2.04 per share.[20]

The Refining Business Segment earnings were up 24 percent to $450 million, but that’s also down 53 percent from adjusted earnings of $960 million in the fourth quarter of 2012. Phillips attributed the drop to lower margins in all regions except the Gulf Coast. "Margins were negatively impacted by weaker worldwide market crack spreads; however, this was partially offset by improved market capture compared with the same period last year," the company said. Marketing and specialties earnings were also down 35 percent to $73 million, due to the sale of its U.K. power generation business and lower marketing margins attributable to rising product prices in the U.S.[21]

The Chemicial Business Segment generated adjusted earnings of $261 million compared with $246 million in the comparable quarter last year. Higher polyethylene margins, equity earnings and ethylene volumes led to the increase. This was partially offset by higher costs and lower benzene margins.[22]

The Midstream Business Segment generated adjusted earnings of $450 million compared with earnings of $960 million in the year-ago quarter. The dismal results can be traced to lower realized refining margins, owing to decline in the average worldwide market crack spread. During the quarter, Phillips 66's refining utilization was at 92% and clean product yield was 84%.[23]

Segmental earnings for Marketing and Specialities were $73 million, down from $113 million from the comparable quarter last year. The decrease was primarily due to the sale of the U.K. power generation business in Jul 2013, and lower marketing margins. This was partially offset by reduced costs and higher volumes.[24]

In the reported quarter, Phillips 66 generated $865 million of cash from operations. It also returned $876 million of capital to shareholders. Of this, $232 million was disbursed as dividends while $644 million was used to repurchase 9.9 million shares of common stock.[25]

2013 Q3: October 30, 2013:Phillips Profits are Down in Third Quarter Due to Refining Losses

Olivia Pulsinelli reported in the Houston Business Journal that Phillips' earnings for the third quarter were $535 million, or 87 cents per share, compared to $1.6 billion, or $2.51 per share, a year earlier. Analysts polled by Thomson Reuters had expected a profit of 94 cents per share. Although the company’s midstream, chemicals, and marketing and specialties businesses were up compared to last year, the refining business posted a $2 million loss. "We ran well during the quarter," said Garland. "Weaker refining margins had a significant impact on our earnings. Chemicals posted strong earnings as a result of solid utilization rates and good margins."[26]

2013 Q2: July 31, 2013: Phillips Earnings Disappoint with 19% Drop in Earnings for 2nd Quarter

FuelFix reported on July 131, 2013 that Phillips underperformed in the second quarter as its earnings dropped 19 percent because of higher costs for oil and outages that shut down key facilities. “We should have run better and our earnings results reflect this,” said Garland. Phillips 66′s adjusted earnings per share of about $1.50 was well below analyst expectations of about $1. 81 for that figure.[27]

Garland cited two reasons for the disappointing earnings. First, Phillips' extended downtime at its facilities, including a refinery and a chemical plant, contributed to $175 million in lost profit. One of the outages, an extended maintenance period at a chemical plant in Port Arthur, lasted for 91 days, the duration of an entire quarter of the year. Second, higher domestic oil prices pushed down profits as the gap between the price of West Texas Intermediate, a benchmark for domestic crude, and Brent, a measure of international oil prices, narrowed substantially during the second quarter. That trend is expected to continue through the remainder of the year, with Brent currently around $107 and WTI at about $105. U.S. refiners had previously enjoyed a huge advantage over their foreign competitors because WTI prices were as much as $20 lower than Brent prices , with some U.S. crudes priced far lower because there was limited access to foreign markets.[28]

2013 Q1: May 1, 2013: Phillips' Profit in 1st Quarter Doubles from Previous Year to $2.23 per Share

Bloomberg reported on May 1, 2013 that Phillips net income for the 1st quarter rose to $1.41 billion, or $2.23 a share, from $636 million, or $1, a year earlier as the margin between oil costs and fuel prices widened and its chemical business improved. Greg Garland has said he’s focused on chemicals, pipelines and natural gas processing to reduce the volatility that comes with refining earnings. “This company is a different animal because the growth opportunities are not on the refining side of the business,” said Fadel Gheit, an analyst at Oppenheimer & Co. Refining profits rose as the margin between the cost of West Texas Intermediate oil and the price at which refiners sell fuel rose 20 percent to an average of $32.689 a barrel in the January-to-March period, according to data compiled by Bloomberg.[29]

Phillips 66 has been working to increase its use of relatively cheap crude by building rail capacity at its plants and buying rail cars to help bring crude from shale formations not yet reached by pipelines and the company has been inching toward the goal of processing only discounted crudes extracted in North America, a target they expect the company to hit within the next few years. "Certainly its an aspiration, but it is concrete and achievable," said Tim Taylor, executive vice president for commercial, transportation, business development and marketing. Phillips 66 said it boosted the share of discounted crude produced in the U.S. and Canada that its refineries process to 68% of its feedstock, up from 60% last year and during the quarter, it processed 221,000 barrels per day of crude from the Eagle Ford, Bakken and Mississippi Lime formations, up 120,000 barrels per day over last year's first quarter.[30]

2012 Q4: January 31, 2013: Phillips 66 Adjusted Profit Beats 4th Quarter Estimates But Gross Profits Down 65% When Including Impairment Charge

Bloomberg reported on January 31, 2013 that Phillips beat fourth-quarter profit estimates by 37 cents more than the $1.69 average of 16 analysts' estimates compiled by Bloomberg. Adjusted earnings for the quarter were $1.31 billion or $2.06 per share, compared to adjusted earnings of $379 million or $0.60 per share in the same period last year. However these adjusted profit figures exclude a writedown of the value of the company's interest in a plant in Malaysia of $2.06 a share. If the writedown is included, then the company reported a 65 percent decline in profit for the fourth quarter from last year as an impairment charge more than offset higher refining and chemical margins.[31][32]

The company has rallied along with other U.S. refiners by boosting access to a growing supply of domestic crude that has become cheaper than overseas oil. U.S. refiners in some regions paid an average of $17.48 less for every barrel they processed compared to the global benchmark oil price, according to data compiled by Bloomberg. "They're taking advantage of the God-given gift of very wide crude discounts and cheap natural gas," Fadel Gheit, a New York-based analyst with Oppenheimer & Co., said in a telephone interview. "They are putting the money to good use, and it's reflected in the stock price."[33]

2012 Q3: October 31, 2012: Phillips 66 Beats Analyst Expectations with 3rd Quarter Profits of $1.6 billion or $2.51 per share

Reuters reported on October 31, 2012 that Phillips announced 3rd quarters profits of $1.6 billion or $2.51 per share, compared with $1 billion or $1.65 per share a year earlier. Analysts on average had expected a profit of $2.35 per share, according to Thomson Reuters I/B/E/S.[34]

Increased access to cheaper crude oil from the United States and Canada boosted Phillips 66's quarterly profits above analyst expectations with more than half of the company's refining capacity in the central corridor of the U.S. with access to cheaper crudes in North Dakota, Texas, Kansas and other states, executives told analysts during Phillips 66's third-quarter earnings conference call. "Our U.S. advantaged crudes increased from 52 percent last year to 61 percent to date in 2012," Chief Financial Officer Greg Maxwell said.[35]

October 10, 2012: Phillips 66 to Announce Third-Quarter Financial Results on October 31

Phillips announced on October 10, 2012 that the company will release its third-quarter financial results on October 31, 2012 and host a conference call to discuss the company’s third-quarter performance and provide an update on strategic initiatives.[36]

2012 Q2: August 1, 2012: Phillips announces Profits up 14% in Second-Quarter Earnings Call

Reuters reported on August 2, 2012 that Phillips 66 posted a 14 percent jump in second-quarter profit with a net income of $1.18 billion, or $1.86 per share, up from $1.04 billion, or $1.64 per share, a year earlier. Chief Financial Officer Greg Maxwell told analysts the company's capital expenditures for 2012 would range between $1 billion and $1.5 billion. Phillips 66 said it would retain its 247,000 barrel-per-day Alliance plant in Belle Chasse, Louisiana, because it expects increased access to cut-price light sweet crude to run there. Garland said Phillips 66 "really likes" its Midwest and Gulf Coast refineries, which have easier access to cheaper Canadian and inland U.S. crudes. "The East and West Coast refineries are challenged refineries, and we think there are opportunities to improve them," Garland told Reuters in a post-call interview. Phillips 66 plans to buy 2,000 railcars to move cheap crude from North Dakota's Bakken shale play to the Bayway plant and its 100,000 bpd plant in Ferndale, Washington. Bayway already runs 10,000 to 20,000 bpd of Bakken crude. Garland said the Bayway Refinery and Ferndale Refinery were "absolutely" more likely to stay in the company's portfolio if Phillips 66 can increase the amount of Bakken crude they run, backing out other more expensive crudes. Bayway can run up to 100,000 bpd of light crude, while Ferndale can run 50,000 and Phillips plans to rail Bakken crude to both plants. Phillips is working to run more shale crude from the Mississippi Lime play in Oklahoma and Kansas at its 198,400 bpd refinery in Ponca City, Oklahoma by trucking crude from the company's existing gathering systems. Garland says that the company is not planning potential acquisitions -- refineries or other assets -- at this time. "There's nothing really interesting to us at this time," says Garland.[37]

Plan to Get Advantaged Crudes to Every Refinery

Garland said that Phillips wants to move the shale crudes from 120,000 to ultimately 450,000 to 460,000 barrels a day. "We are trying to get those crudes to every refinery we can. But clearly to Ferndale on the West Coast to Bayway on the East Coast, we think Ferndale can probably run 50,000 barrels a day of Bakken crude. Wood River, we can run up to 90,000 to 120,000 barrels a day of shale type crudes there. Ponca about 60,000 barrels a day. Bayway, 100,000 barrels a day of shale type crudes that we can advantage, that we can move into Bayway. Smaller Rodeo we can get at 30,000 barrels a day and Sweeny about 40,000 barrels a day. And then Alliance, we are running today Eagle Ford crude and some Bakken crude in Alliance, but ultimately 50,000 to 90,000 barrels a day. So we have a plan to get advantaged crude into most of our refineries."[38]

June 28, 2012: Phillips 66 to Hold First Earnings Call on August 1

Phillips 66 issued a press release on June 28, 2012 announcing that Phillips will issue its second-quarter earnings report on August 1 and Greg Garland and Executive Vice President and Chief Financial Officer Greg G. Maxwell will host a webcast to discuss the company’s second-quarter performance and provide an update on how the company is delivering on its strategy.[39]

Investor Conferences

February 28, 2013: Phillips to Present at Bank of America Merrill Lynch 2013 Refining Conference on March 7

The Fort Mills Times reports that Larry Ziemba, executive vice president, Refining, Project Development and Procurement of Phillips 66 will speak at the Bank of America Merrill Lynch 2013 Refining Conference in New York on Thursday, March 7 to discuss the company’s plans to enhance refining returns, as well as its overall strategy for growth and value creation.[40]

February 5, 2013: Taylor Tells Credit Suisse Energy Summit That Canadian Crude is Being Transported to California Refineries

Reuters reported on February 5, 201 that Tim Taylor, Phillips executive vice president for commercial, marketing, transportation and business development, told the Credit Suisse energy conference that Phillips has begun moving cut-price Canadian crude to its California refineries at Los Angeles and San Francisco via rail. "We're beginning to deliver Canadian crude to our California refineries by rail," said Taylor. Garland told Reuters on January 30, 2013 that Phillips was looking at coiled tube cars that are suited to bitumen in Canada's heavy oil deposits that must be heated in order to flow.[41]

January 22, 2013: Phillips 66 to Present at Credit Suisse Energy Summit on February 5, 2013

Daily Finance reported on January 22, 2013 that Tim Taylor, executive vice president, Commercial, Marketing, Transportation and Business Development of Phillips 66 will speak to investors and securities analysts at the Credit Suisse Energy Summit in Vail, Colo. on February 5, 2013 to discuss the company's strategy to enhance refining returns, grow midstream infrastructure and chemicals capacity, and increase distributions to shareholders.[42]

December 13, 2012: Phillips Announces 2013 Capital Program at Inaugural Analyst Meeting

Phillips reported on Decmeber 13, 2012 that they had hosted their inaugural Analyst Meeting in New York to discuss their capital program of $3.7 billion for 2013, a 6 percent increase over the $3.5 billion capital spend for 2012, and how it will to enhance returns, deliver profitable growth and increase distributions to shareholders.[43]

November 27, 2012: Greg Garland to Host Inaugural Analyst Meeting on December 13

Marketwatch reported on November 27, 2012 that Greg Garland and other executives at Phillip 66 will discuss the company's strategic objectives, including its plans to enhance returns, grow profitably and increase shareholder distributions at an Inaugural Analyst Meeting in New York on December 13, 2012.

November 13, 2012: Tim Taylor Presents at Bank of America Merrill Lynch 2012 Global Energy Conference

4-traders reported on November 5, 2013 that Tim G. Taylor, executive vice president, Commercial, Marketing, Transportation and Business Development of Phillips 66 spoke to investors and securities analysts at the Bank of America Merrill Lynch 2012 Global Energy Conference in Miami, Fla. on November 13, 2012 with an overview of the company and its strategic initiatives.[44]

September 5, 2012: Garland Speaks at Barclays CEO Energy-Power Conference

Phillips 66 reported that Phillips CEO Greg C. Garland spoke to investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 to discuss Phillips 66's business portfolio and provide an update on the company's strategic progress.[45]

August 22, 2012: Garland to Speak at Barclays CEO Energy-Power Conference on September 5

Marketwatch reported on August 22, 2012 that Phillips CEO Greg C. Garland will speak to investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 20120 to discuss Phillips 66's business portfolio and provide an update on the company's strategic progress.[46]

June 5, 2012: Garland Presents Phillips Strategy for Growth to the Citi Global Energy Conference

On June 5, 2012 Phillips CEO Greg Garland presented to the Citi Global Energy Conference and said Phillips has a clear strategy for growth and improving returns.[47]

Refining and Marketing Strategy

Garland said Phillips is kind of an average performer in terms of returns on Refining and Marketing with a 12% ROCE in this business, but the expectation is thatthis can be improved to a 15% ROCE business over the cycle. "The R&M business for us is a run well, optimized business. You won’t see us adding capacity. You will see us investing around the infrastructure to put more advantaged crude to the front end of the refineries and to be able to export."[48]

There is another way Phillips would like to improve returns in the refining business and that is by getting advantaged crude to the front end of the refineries. "Today we can process about 500,000 barrels a day of TI-related and about 100,000 barrels a day of shalerelated crudes. If you think about the mid-con, we think there’s about 2 million barrels a day of new light sweet crude coming on in the central part of the US. Then you’ve got another couple million barrels a day of the Canadian heavy that’s ultimately going to make its way down through the midcontinent and ultimately, we believe to the Gulf Coast. And so every dollar that we can capture across our system is worth about $500 million of net income to us." So Phillips is going to go around pipelines and is considering buying a couple thousand more rail cars to get Bakken crude either east and west. "We’re running about 100,000 barrels a day of these shales today and we think we can easily in the next year or two move another 120-150,000 barrels a day of incremental crude through rail. Plus as these pipeline solutions become more available and ready, we’ll capture those opportunities. But ultimately, we can process about 500,000 barrels a day of these shale-type crudes."[49]

Phillips also wants to increase yields in the refineries. "Every one percent clean product yield is worth somewhere between $100 to $150 million of net income. For every one percent diesel yield, we can increase, in today’s market is the capture of about $60 million in net income. In the first quarter we ran about 41% diesel, which is really the highest of the peer group if you look out there. And so we’re pretty comfortable that we can continue to tweak the operations in refineries and to eke out a couple more percentage points in clean product yields and continue to push our diesel yields up without significant investment at this point in time.[50]

When asked a question about rationalizing refining capacity by closing down plants Garland said it is difficult to shut refineries down. "Mostly because you think about the environmental liabilities that have accrued over the years. So it takes a lot of money to actually exit one of these facilities. And so that’s what you see people convert them to other uses, terminals, etcetera. So they tend to find another life in some shape or form to avoid the remediation that comes along with completely clearing, closing, shutting down and remediating the whole facility."[51]

Midstream Strategy

Garland said there are s large opportunities in terms of midstream investment in gas gathering and processing, NGL fractionation, and distribution and that Phillips has a a very aggressive investment profile in the midstream space. "We have about $7 billion of projects identified, underway in this space and so you think at the DCP JV level spending kind of $500 million a year, historical capex, we’re moving that up to about $2 billion a year," said Garland. "We also have our own embedded midstream business within Phillips 66. It’s primarily pipelines and ownership in fractionators at Conway, Borger, and Belvieu. Good business generates good returns for us in a growth area for us and we would consider growth in this area around fractionation, around LPG exports."[52]

Chemical Strategy

Garland says the NGLs that are coming on over the next 10 years are going to be feedstocks for the petrochemicals business and that the Joint Venture with Chevron is well positioned for that.[53]

June 5, 2012: Garland Presents to Investors at Citi Global Energy Conference

On May 29, 2012 Phillips 66 announced that CEO Greg Garland will speak to investors and securities analysts on June 5, 2012 at the 2012 Citi Global Energy Conference partipating n a roundtable discussion, providing a brief company overview and engaging in Q&A with investors.[54]

May 24, 2012: Clayton Reasor Presents to UBS Global Oil and Gas Conference

On May 17, 2012 Phillips 66 announced that Clayton Reasor, Phillips 66 senior vice president for Investor Relations, Strategy and Corporate Affairs, will speak to investors and securities analysts on May 24, 2012 at the UBS Global Oil and Gas Conference in Austin, Texas about Phillips 66's strategic priorities, including plans for growth and returns enhancement.[55]

Other Investor News

July 23, 2013: Phillips 66 Partners raises $377.8 million in IPO

Businessweek reported on July 23, 2013 that Phillips 66 Partners LP raised $377.8 million from its initial public offering of stock. 16.4 million shares sold at at $23 up from 15 million shares the partnership had expected to sell for $19 to $21 each. The banks managing the deal may buy another 2.5 million shares if there's demand for them and if they do, the public will own about 26 percent of Phillips 66 Partners. Phillips 66 will own the rest of it. The shares are expected to start trading on the New York Stock Exchange Tuesday under the "PSXP" ticker symbol.[56]

July 15, 2013: Phillips 66 Partners Plans $315 million IPO

Fox Business reported on July 15, 2013 that Phillips 66 Partners plans an initial public offering will likely total as much as $315 million that will include certain pipeline, terminal and storage systems—used for crude oil and refined petroleum product—in the Central and Gulf Coast regions. The IPO of approximately 15 million shares is expected to price in a range of $19 to $21 a share, according to a filing with the Securities and Exchange Commission.[57]

March 27, 2013: Phillips 66 Midstream Vehicle Registers for $300 million IPO

Reuters reported on March 27, 2013 that Phillips has registered for an initial public offering of units in a midstream partnership that would raise $300 million and will trade on the New York Stock Exchange under the "PSXP" ticker symbol. The IPO is expected to include the Clifton Ridge oil pipeline and storage system in Louisiana and refined product pipelines and storage in Texas and Illinois: Sweeny-Pasadena and Hartford Connector, respectively.[58]

July 3, 2012: Phillips Recommends Stockholders Reject TRC Mini-Tender Offer

CSP Net reported on July 3, 2012 that Phillips 66 Co. has recommended that shareholders not tender their shares in response to an unsolicited mini-tender offer that TRC Capital Corp. TRC is offering to purchase up to three million shares, or less than 0.48% of Phillips 66's outstanding common stock at an offer price of $31.30 per share represents a 4.78% discount to the Phillips 66 closing share price on June 25, 2012, the day prior to the commencement of TRC's mini-tender offer. "Phillips 66 strongly recommends investors obtain current market quotes for their shares of common stock and consult with their financial advisors with respect to TRC's offer," the company said. "The company does not endorse and is not associated with TRC's unsolicited mini-tender offer."[59]

June 7, 2012: Garland says Phillips Deserves a Higher P/E

On June 7, 2012 Barrons reported that Greg Garland said that Phillips is a lot more than just an oil refiner and deserves a higher price/earnings multiple than the paltry P/E ratio that refiners now garner. "We don't want the Street to just give us a refining multiple," Garland said in an interview in New York. Philips shares, at around 32, trade for less than seven times projected-2012 profits of $4.90 a share and yield 2.5% based on the company's targeted quarterly dividend of 20 cents that is set to begin in the third quarter. Garland says that Phillips has gotten about 60% of its profits on average over the past three years from higher-return businesses, principally chemicals and so-called midstream assets, including pipelines and processing facilities that handle natural-gas liquids. The chemical and midstream operations generate 20%-plus returns on capital and offer significant reinvestment opportunities.[60]

May 2, 2012: Phillips Rings Wall Street's Opening Bell

On May 2, 2012, executives and employees from Phillips 66 celebrated the company's first week of regular trading on the New York Stock Exchange by ringing the opening bell. Chairman and Chief Executive Officer Greg C. Garland led the delegation, which included employees from its Houston Headquarters and Bayway Refinery in Linden, N.J.[61]

April 23, 2012: Phillips to Join S&P 500

It was announced on April 23, 2010 that Phillips 66 will join the the S&P 500.[62]

April 17, 2012: Howard Thill says Phillips Will Have Increased Flexibility

On April 17, 2012 Howard Thill, Marathon Oil’s vice president of investor relations and public affairs, spoke about the ConocPhillips split at Oklahoma State University’s energy conference in Oklahoma City. “It’s about enhanced flexibility — the ability to focus on an individual asset or set of assets,” Thill said. “When you have a very large conglomerate, it’s very difficult to be able to generate enough information at a low enough level to give investors that transparency into the business,” Thill said. “Independent refiners and independent exploration and production companies disclose much more information about their companies than a major integrated because from a major integrated standpoint, the scale is so large that it just doesn’t make a difference in that respect.”[63]

April 4, 2012: ConocoPhillips Board of Directors Votes to Create Two New Companies

On April 4, 2012 ConocoPhillips' board of directors announced that two new companies will be separated through the distribution of shares of Phillips 66 to holders of ConocoPhillips common stock. This distribution is expected to occur after market close on April 30, 2012. ConocoPhillips shareholders will receive one share of Phillips 66 common stock for every two shares of ConocoPhillips common stock held at the close of business on the record date of April 16, 2012.[64]

Master Index for Phillips 66 Articles

References

  1. Bartlesville Examiner-Enterprise. "Phillips 66 CEO praises city" by Kelcey King. August 28, 2008.
  2. Google Finance. "PSX" January 1, 2014.
  3. Google Finance. "PSX" January 1, 2013.
  4. Google Finance. "PSX" January 1, 2014.
  5. Google Finance. "PSX" January 1, 2013.
  6. Credit Suisse Global Energy Summit. "Transcript of Phillips 66 Presentation" by Greg Garland. February 12, 2014
  7. Marketwatch. "Phillips 66 Announces Quarterly Dividend" February 14, 2014.
  8. Businesswire. "Phillips 66 Announces New $2 Billion Share Repurchase Program" December 6, 2013.
  9. Seeking Alpha. "Phillips 66 Announces 25 Percent Increase in Quarterly Dividend" October 2, 2013.
  10. istockanalyst. "Phillips 66 Announces Quarterly Dividend" July 10, 2013.
  11. Wall Street Journal. "Phillips 66 Announces Quarterly Dividend" May 8, 2013.
  12. Investors Business Daily. "Phillips 66 Announces Quarterly Dividend" February 11, 2013.
  13. Bloomberg. "Phillips 66 raises dividend, plans new $1B buyback" December 7, 2012.
  14. Businesswire. "Phillips 66 Announces a 25 Percent Increase in Quarterly Dividend" October 3, 2012.
  15. Barrons. "Phillips 66 Initiates $0.20 Quarterly Dividend" by Michael Aneiro. July 11. 2012.
  16. Phillips 66. "Transcipt of First Stockholder's Meeting" May 8, 2013.
  17. Phillips 66. "Transcipt of First Stockholder's Meeting" May 8, 2013.
  18. Herald Online. "Phillips 66 to Host Inaugural Meeting of Stockholders" April 17, 2013.
  19. Houston Business Journals. "Phillips Q4 Earnings Beat Expectations But Fall Short Of The Prior Year" by Olivia Pulsinelli. January 29, 2014
  20. Houston Business Journals. "Phillips Q4 Earnings Beat Expectations But Fall Short Of The Prior Year" by Olivia Pulsinelli. January 29, 2014
  21. Houston Business Journals. "Phillips Q4 Earnings Beat Expectations But Fall Short Of The Prior Year" by Olivia Pulsinelli. January 29, 2014
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  24. Nasdaq. "Phillips 66 Beats Earnings Ests, Lags Y/Y - Analyst Blog" January 29, 2014.
  25. Nasdaq. "Phillips 66 Beats Earnings Ests, Lags Y/Y - Analyst Blog" January 29, 2014.
  26. Houston Business Journal. "Phillips 66's Q3 profit hit by refining loss" by Olivia Pulsinelli. October 30, 2013.
  27. FuelFix. "Phillips 66 earnings fall with disappointments" by Zain Shauk. July 31, 2013.
  28. FuelFix. "Phillips 66 earnings fall with disappointments" by Zain Shauk. July 31, 2013.
  29. Bloomberg. "Phillips 66 Quarter Profit Doubles on Refining, Chemicals" by Bradley Olsen. May 1, 2013.
  30. Fox Business. "Phillips 66 Profit Surges; Aims to Use All Cheap, Domestic Crude" May 1, 2013.
  31. Tulsa World. "Phillips 66 profit beats estimates" by Bradley Olsen. January 31, 2013.
  32. Nasdaq. "Phillips 66 Q4 Profit Down 65% On Impairment Charge" January 30, 2013.
  33. Tulsa World. "Phillips 66 profit beats estimates" by Bradley Olsen. January 31, 2013.
  34. Reuters. "UPDATE 3-Phillips 66 quarterly profit up on good margins" October 31, 2012.
  35. Reuters. "UPDATE 3-Phillips 66 quarterly profit up on good margins" October 31, 2012.
  36. Phillips 66. "Phillips 66 to Announce Third-Quarter Financial Results" October 10, 2012.
  37. Reuters. "Phillips 66 profit jumps 14 pct, shares up" by Kristin Hays. August 2, 2012
  38. Phillips 66. "Transcript for Phillips 66 second-quarter earnings call" August 1, 2012
  39. BusinessWire. "Phillips 66 to Hold First Earnings Call" June 28, 2012.
  40. Fort Mills Times. "Phillips 66 to Present at Bank of America Merrill Lynch 2013 Refining Conference" February 28, 2013.
  41. Reuters. "UPDATE 1-Phillips 66 moving some Canadian crude to Calif. refineries" by Kristen Hays. February 5, 2013.
  42. Daily Finance. "Phillips 66 to Present at Credit Suisse Energy Summit" January 22, 2013.
  43. Phillips 66. "Phillips 66 Announces 2013 Capital Program and Intent to Form MLP" December 13. 2012.
  44. 4-traders. "Phillips 66: to Present at Bank of America Merrill Lynch 2012 Global Energy Conference" November 5, 2012.
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  49. Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
  50. Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
  51. Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
  52. Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
  53. Phillips 66. "Greg Garland's 2012 Presentation to the Citi Global Energy Conference" June 5, 2012.
  54. TheStreet.com "Phillips 66 To Participate In Citi Global Energy Conference" May 29, 2012.
  55. Marketwatch. "Phillips 66 to Present at UBS Global Oil and Gas Conference" May 17, 2012.
  56. Businessweek. "Phillips 66 Partners raises $377.8M in IPO" July 23, 2013.
  57. Fox Business. "Phillips 66 Partners Eyes IPO of $315M" by Matthew Pocco. July 15, 2013.
  58. Reuters. "Phillips 66 midstream vehicle registers for $300 million IPO" March 27, 2013.
  59. CSP Net. "Phillips 66 Stands Tall: Recommends shareholders reject mini-tender offer by TRC" July 3, 2012.
  60. Barrons. "Wall Street Should Pump Up Phillips 66's P/E" by Andrew Bary. June 9, 2012.
  61. MarketWatch. "Phillips 66 Rings Opening Bell at New York Stock Exchange" May 2, 2012.
  62. R&D Magazine. "Phillips 66 to replace Supervalu in S&P 500" April 23, 2010
  63. The Daily Oklahoma. "Phillips 66 stations return to Oklahoma" by Adam Wilmoth. May 31, 2012.
  64. ConocoPhillips. "ConocoPhillips’ Board of Directors Approves Spin-off of Phillips 66" April 4, 2012

About the Author

Hugh Pickens

Hugh Pickens (Po-Hi '67) is a physicist who has explored for oil in the Amazon jungle, crossed the empty quarter of Saudi Arabia, and built satellite control stations for Goddard Space Flight Center all over the world. Retired in 1999, Pickens and his wife moved from Baltimore back to his hometown of Ponca City, Oklahoma in 2005 where he cultivates his square foot garden, mows nine acres of lawn, writes about local history and photographs events at the Poncan Theatre and Ponca Playhouse.

Since 2001 Pickens has edited and published “Peace Corps Online,” serving over one million monthly pageviews. His other writing includes contributing over 1,500 stories to “Slashdot: News for Nerds,” and articles for Wikipedia, “Ponca City, We Love You”, and Peace Corps Worldwide.

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